Implement Flexible Pricing Strategy to Maximize Revenue in Omnichannel Retail

By: Michael Buchanan, CEO of Cloudbox Inc.

As more people choose to shop online, retailers will have to work harder to welcome shoppers into real world stores. In a more austere economy, shoppers are checking prices more carefully, looking to see what best value is, and even comparing prices on their mobile devices. Today’s consumer also uses price comparison websites and is more price-sensitive than ever before.

Tight control of pricing is essential in competitive markets, with some retailers using pricing tactically, for example, using different pricing strategies for different product categories.

Online prices are easily updated according to customer demand and competitor promotions. Some retailers choose to be equally flexible with their in-store pricing strategy while others choose to offer a more competitive pricing online, maybe tracking price moves on Amazon.

Where data analytics are available to the retailer, sophisticated pricing strategies can be put in place, but if there is a mismatch between the sophistication of the strategy and the physical appearance of the new pricing, retailers may still not see the highest level of return from their strategy.

Retail pricing has become more dynamic, particularly for clearance, with weekly, regional markdowns.

However, a retailer should not allow price reductions to damage their brand. Shoppers want quality and value, but they do not want to buy “cheap”.

Retailers can use pricing to drive loyalty and increase customer engagement without starting a downward spiral.

Adding all these factors together, it is essential that in-store price labeling must be accurate and clear, to match the online experience. It should also be easy to update.

Customer Experience/Brand Values
The legibility of handwriting is a classic problem. For example, the number one is often confused with seven. In particular, prices that have been crossed out can cause queries, and this is even more likely when an item has been discounted more than once. Presentation is a huge part of the brand experience in-store, so it is better to avoid handwritten labeling altogether. The US off-price and outlet sector, in particular, has struggled to maintain the visual appearance of their labels as these photos show.

Professional-looking printed labels provide a more expensive feel, and a sense of quality when customers are looking to buy value, not cheap.

Printing labels in-store brings a tactical advantage. Labels can easily be updated as prices are adjusted, to maintain consistency across the two channels, online and in-store. In the US, convenience store 7-Eleven knows its customers well and knows that they are looking for the nutritional content of their snacks – so these are shown on the labels.

Clear labeling makes for a better customer experience all round. There will be fewer misunderstandings or disputes, which can disgruntle customers and keep others waiting. It also helps to reduce queues and prevent the situation where customers who prefer not to wait to query prices, abandon their purchases and leave the store.

In the omnichannel scenario, bricks and mortar stores must make the in-store experience as easy as the online one and maintain the same experience for those customers who start their purchase journey online and then visit the store. Shoppers still prefer to buy certain items such as jeans, dresses, lingerie, footwear, men’s suits and children’s clothing in-store, because size and fit are important.

However, in the self-service shopping culture, the lack of engagement between store assistants and customers may be a missed opportunity. Stores can quickly become untidy, for example if no one is available to replace clothing on the correct rails. Store staff are better deployed to assist customers, finding items that may not be at the front of display, and encouraging people to buy. They should be the friendly ambassadors of the store.

It is notable that smaller privately-owned retailers often survive due to their ability to engage with their customers and persuade them to reach a purchase decision. If staff are available on the shop floor, they can take advantage of the opportunities to sell, up-sell and cross-sell more items. This can make a real commercial difference to a retailer. However, this is only possible if the in-store processes such as pricing items are efficient. If store staff are busy in the back rooms, they are away from the shop floor where they can assist customers.

Efficiency makes a difference on the sales floor. Saving small amounts of time by reducing queries, preventing queues, and providing a quick service at the point of sale, all help to make store staff available to serve their customers.

Financial Considerations
Financial considerations are crucial when trading is tough, and cash is in short supply. Some retailers may choose to use price mark-downs as an incentive to get cash flowing. If so, they may want to discount different ranges at different markdowns or offer seasonal promotions for limited periods. This means that they will need a facility to update individual labels quickly and easily as the pricing strategy changes.

Cost-conscious retailers will be aware of the practical reasons for printing labels in the store.

Buying plain labels and printing them in-house is less costly than buying pre-printed labels. If labels are printed in-store, they can be printed as and when they are needed, so there is minimal waste.

Printed labels are clearer and provide a more up-market feel. More importantly printing is faster and saves valuable staff time.

If prices and discounts are shown more clearly, the purchase rate is likely to be higher.

Summary of Business Benefits

  • A dedicated label printing solution in-store will bring these benefits:
  • The ability to respond to market conditions with dynamic pricing
  • Efficiency because employees are present in-store to help customers
  • Maintain brand values with high quality label design
  • In-store label printing uses less costly stationery
  • Clarity of pricing – fewer customer queries and “walkaways”
  • Print just the labels you need – minimal waste
  • Address the expectations of the Mobile Shopper

No one will disagree that retailers must do all they can to enhance the customer experience so that very visit to the store will result in a sale.

Price labeling is a critical area where there is scope for improvement, to provide a more professional and up-market experience in-store and improve efficiency.

Easy, flexible in-store pricing allows retailers to maintain brand values and presentation when stock is discounted or marked down for a short promotion, such as Black Friday.

With a flexible in-house labeling system, the retailer can use larger labels that show both the “Was” and “Is Now” prices, and other relevant details about the item.

When prices are adjusted, new labels can cover the previous ones, so no item will ever have multiple labels showing.

Retailers that have a flexible label printing solution in house will be able to adjust pricing as they wish and maintain the professional appearance of their price tags. They can print a new set of labels whenever they want.

It tends to be Tier 2 and Tier 3 retailers who do not have the fully “wired up” in-store infrastructure of their larger competitors, nor the capital expenditure programs to invest in technology, that will see the greatest benefits from an updated pricing solution.

These have historically been in the following sub-sectors:

• Convenience stores • Sportswear • Luggage and Apparel • Perfume and Lotion • Ladies Fashion • Youth Fashion • Baby/Toddler • Computer Console and PC Games • General Merchandise

Labeling solutions are scalable and can be implemented quickly and easily in standalone, single stores or across multiple sites. Learn more here.

Michael Buchanan and CloudBox Inc. are committed to providing customers and partners with a cost-effective and efficient service by utilizing best-in-class partners, suppliers and processes. Through this philosophy, they have established relationships with a number of key service providers and partners which allows them to be flexible in the service delivery to their customers. For more information, email